City cautious with savings

Families, businesses and governments all face the same choices when they hit tough financial times: trim spending or dip into savings.

Faced with its own budget shortfall, the city of Lawrence has decided to do some belt-tightening - but not because there's no money in the bank.

The city will have nearly $6 million in unspent money, plus another $9.4 million in "reserve fund" savings, when the 2002 fiscal year ends in a few weeks. But it's unlikely any of it will be used to cover the expected $1.3 million in state aid lost when Gov. Bill Graves decided last month to eliminate payments to counties and cities.

"There has to be something there in case of dire emergency," Mayor Sue Hack said of reserve funds. "We can't bleed ourselves dry."

Some of the money already has been designated for the 2003 budget, officials say. Funds also must be kept on hand to cover future expenses and protect the city's financial standing in the eyes of bond analysts. And there is little sentiment to dip into what's left.

Instead, the city has decided to put off hiring new police officers, firefighters and other employees department heads say are needed to serve Lawrence's growing population.

Commissioner Mike Rundle has been the lone public voice to suggest the city should take a closer look at using its reserve funds to help pay for the city's day-to-day operations.

"We've never said, in a policy sense, (how much in reserves) is enough," Rundle said. "Should we take the excess and use it on areas of need?"

The city regularly has money left over at the end of the fiscal year; in fact, officials plan on it. The 2002 budget was funded, in part, by nearly $6 million left at the end of 2001. Officials are projecting a balance of at least $872,000 at the end of 2003 and expect a higher final sum.

But City Manager Mike Wildgen urged caution about spending the projected leftover funds for 2003.

"It is imperative that, with the loss of the state funds, we protect the balance as much as possible," Wildgen wrote in a memorandum to city commissioners.

Reserve funds are savings kept on hand for everything from equipment expenses to workers' compensation claims. Wildgen said much of the money should be left in reserves.

Dipping into the reserves, he said, "just hurts the fund you need that money for."

Rundle, however, said he'd like the commission to have more information about the possibilities of reserve funds.